In the mentioned report, a research has been conducted on a proposed company for solving real life issues of companies which are related to public relations, management and accounting business setting. To solve the issues, proper research has been conducted in the report that recognizes the factors and provides mitigation strategies. The implications of the issues have been demonstrated conclusively in relation to the mentioned domains. The research has been conducted by keeping in mind several business aspects such as financial analysis and conditions, multinational ad global strategies, competitive and industry analysis, diversification strategies and competitive capabilities of the management as well as the public relations sector. The report has been divided into several sections. In the first section, the background of the proposed company has been explained and the topics that needs to be addressed has been mentioned. In the second section, the problems and issues that need to be analysed are identified and discussed. In the subsequent sections, the issues that are identified are evaluated in a detailed analysis where the issues are mentioned and their implications are assessed. The recommended suggestions and solutions for the mentioned issues are identified and discussed in the following report. The report also discussed the career plan as well as the future study aspects that are related to this research.
Fitbit Inc is a company which is completely dedicated to the fitness and health. They make products and provides services that help the lives of the people to transform. The main goal of the company is to encourage people ti live their lives in an active manner. They are inclined in designing their products that fits their experiences easily without altering their fitness and health goals. It is a household name nowadays which comes with the fitness tracking technologies and allows an average person to calculate their walking as well as other physical activities. In 2017, the company launched its latest device in range namely Fitbit Alta HR. The most popular devices of the Fitbit Corporation is Surge and Fitblit Blaze device. Normally, the devices are priced moderately and offers different features to differentiate it from the existing products in the market.
The company was founded by James and Eric in 2007 when they realized that the advantages of sensors could be implemented in the health and fitness domain (Fitbit Official Site for Activity Trackers and More, 2018). The company was founded keeping the wearable technology in mind. In 2015, the stock of the company fell down by 50% which led to the resignation of a number of members from the management team. The CEO of the company announced that the company will be going a major transformation after acquiring one of its competitors, Pebble.
The management team of the company comprises of the chief technology officer (Eric Friedman), chief financial officer (William Zerella), Chief marketing officer (Tim Rosa), Chief accounting officer (Ron Kisling), EVP operations (Jeff Devine), Chief Marketing officer (Amy Mcdonough) and the CEO of the company (James Park). The headquarters of the company is situated at San Francisco, 199 Fremont Street.
The company provides a number of devices which can be logged in from an Android or IoS device. The devices are Bluetooth enabled and has the capacity to track the weight, sleeping patterns, food activities and more. The calories that are burned and information about the steps taken by the users are all carried out by the device and the installed applications. The company claims that such devices in the market are necessary for increasing the motivation of their target customers who are mostly exercise intensive participants (Case et al. 2015). The company gained major publication when a 2016 study showed that wearable technology can enhance weight loss in individuals.
Recently, the company is facing major issues due to some steps taken by the management, accounting and PR teams. The figures and charts show that the company has less than two years to achieve proper sustainability. This has been affected due to activities performed by individual departments of the company. The accuracy of these devices were naturally raised by customers which was not handled carefully by the PR team (Sperlich & Holmberg, 2016). The management team also failed to provide proper strategies for the profitable expansion into other countries. The sales figures and the revenue structure was also not properly calculated by the accounting team which led to the loss of trust by stakeholders. The wrong actions of the PR team naturally led to the recall of Fitbit Force which led to the loss of millions of dollars for the company. In the following sections of the report, the issues that has been caused by the mentioned departments have been analysed and assessed and proper solutions to the mentioned challenges have been addressed.
There are several problems and issues that are being faced by the company. A number of management problems have cropped up due to oncoming challenges and rapid growth. A number of issues have also been highlighted which are related to public relations.
Recently, the company came under a lot of scrutiny and negative press due to some issues that are mentioned below. A study conducted in 2015 showed that wearable devices can help humans in reducing their body weight in a time span of two years (Diaz et al., 2015). But no study claims that the device is responsible for altering the exercising and diet schedules of the person. The company used this wrong information to sell their devices which resulted in a lot of negative reviews about the company. Moreover, a research that was conducted in 2014 was carried out on 13 activities done by a person with the band devices fitted to a number of person. The people were asked to run on a treadmill at a fixed time and speed. The devices were then checked to measure their accuracy. It showed that the device had miscalculated the steps and the calorie burnt information was not reasonable perfect.
The company also faced a lot of problems due to the health effects that some devices were causing. The company initially denied such allegations but after some
For a number of purposes the company has been trying to sell a huge range of wearables. The management team of the company insisted on diversifying its products to get a grip over the ever changing markets. Since then, Fitbit has invested on several devices such as Surge, Blaze smart watches, Alta ad Flex 2 fitness trackers and on clip devices like One and Zip. But the company failed to keep into account its competitors such as Garmin. The management team failed to analyse its competitive and industry analysis on how much the existing company (Garmin) has already controlled most of the market. The competitor Garmin sells similar products related to outdoor activities such as Golf, swimming and jogging. It even targets high end customers in partnership with Fenix Chronos and sells premium products with intact jewellery (Wang et al., 2015). At that price range, Fitbit does not have any products which can career to any customers.
The implication of this management decision resulted in the increase of sales for Garmin. Its revenue related to fitness rose more than 30% (Mackinlay, 2013). The scattergun strategy that was implicated by the management team clearly backfired. Instead of Fitbit, its competitor’s outdoor revenue increased by 27% and boosted its huge demand for outdoor wearable devices. The lack of an aggressive approach clearly led to this unfavourable implication.
For analysing several multinational strategies and diversifying their business strategy to other reasons, the management team of Fitbit decided n migrating to the Asian countries. To aggressively attack its impending competition, the company had to shift to the overseas market like the Asia Pacific region where the wearable technology was still at its infancy. But the sales figure of the last quarter clearly showed that the company has yet to figure out a yet to penetrate these markets profitably (Gillinov et al., 2017). The implication was that as the management and accounting team failed to figure out a proper revenue figure, it led to the loss of trust by the stakeholders. The accounting team later admitted that the growth figure was not expected by them. The main reason for this failure was the improper localization and marketing efforts played out by the company. The revenue from the overseas region decreased by around 45% every year which accounted for around 7% of its total revenue (Tully et al., 2014).
The company also faces strong competition from the competitors of the region such as Xiaomi which cost less than $20. The lack of proper diversification strategy led to the loss of customers who migrated to other ecosystems such as Apple to avail the better looking versatile devices.
The management team and accounting team is responsible for the undisciplined spending that the company is carrying out since 2015. The stakeholders are putting immense pressure on the company for its increasing expenses. The expenses of the company rose to around 300 million dollars by the end of 2016 which was around 70% (Sasaki et al., 2014). Around 230 million dollars were spent in research and development. The management team failed to take into account that both the figures exceeded its annual growth of 40% in that time period. The management and accounting team hoped that the high marketing expenses will lead to more revenue from the company but the annual sales figure of the company in the third quarter of last year showed that that as not the case. Moreover, the company is also facing problems due to the manufacturing defect that was found in the Flex 2 recently (Phillips, Petroski & Markis, 2015). This will likely set back the company by around 50 million dollars at minimum. This defect should have been spotted earlier by the research and development team which led to these dismal implications on its revenue.
The company is also facing a lot of issues due to its public relations department. The company (when Park was CEO) faced a lot of criticisms due to the public relations debacle it had. In 2014 when the Fitbit Force device was launched, the device had to be called back as it caused rashes and buns. Recently, the company was sued by a number of customers who claimed that the Fitbit Charge HR device failed to accurately show their heart rates which has been denied continuously by Fitbit. Moreover, the Charge 2 device that was launched in August last year failed to show proper walking distances due to several software issues. The company continuously denied such allegations until October of last year when it quietly rolled out an update that fixed the bug. The implication was that it led to massive bad publicity about the company which was not addressed carefully by the public relations department of the company. The company had to recall the devices after the Consumer Protection Safety Commission department stepped in (Singh et al. 2015). The negligence of the PR department of the company was highlighted even more when the CPSC released an official recall form which stated that the total number of skin irritations due to the mentioned devices was around 1000 and the blistering cases was near to 200. In 2017, when a woman complained that her device set on fire automatically and caused her second degree burn, the PR department of the company blatantly refused the claim and proposed that external forces were responsible for the incident (Huang et al., 2016).
The above highlighted problems and issues in the report resulting the loss of revenue of 23% for the company. This was around $0.19 per share or $45 million dollars. The net income of the company however decreased by around 42% to 25 million dollars (Diaz et al., 2015). The company is however hoping for a revenue growth of around 3% which is average in comparisons to the growth that the company was expecting 3 years ago.
The company has to become aggressive in its strategic approach just like its competitor Garmin did during its initial days. The management department has to properly analyse e the market first before implementing new strategies for the future direction of the company. The company has to cater to its stakeholders as well (Paul et al., 2017). The management team has to address the concerns related to the other competitors in the foreign regions like Xiaomi. It has to make its products’ pricing competitive so that the customers do not migrate to other devices offering similar features like Apple Watch (Adam Noah, Spierer, Gu & Bronner, 2013). The company has to stop promoting it products through weak marketing campaigns. Moreover, the devices that it is releasing has to be verified and tested properly before releasing in the market. The recent failure of a device by the prospective company even highlight this issue more which has led to the loss of 50 million dollars (Sasaki et al. 2015). The company is already facing a lot of issues due to the accounting team who have year after year provided incorrect forecast of its revenue system. The stakeholders’ trust need to be brought back by innovating and promising possible changes that the company can cater to in the present situation instead of false promises. Instead of spending so much money on research and development of versatile products, the company can first spend its resources on its existing devices and how the issues can be handled. One more situation like the Flex 2 can put the company in a risk of never coming back in a profitable manner (Takacs et al. 2014). The company needs to prepare a strong marketing team who can help in promoting positive feedbacks for the company. The Public relations department team has to change as the present members of the team has failed considerably to address the situations properly that the company is acing (Wallen et al., 2015). Wrong communication with the customers who are facing issues due to the products of the company has to be addressed in a manner which is beneficial for both parties Failure to do so can result in multiple lawsuits and unnecessary hassles (Muro-De-La-Herran, Garcia-Zapirain & Mendez-Zorrilla, 2014). Moreover, it also leads to bad publicity for the company which leads to bad revenue growth. The company has to develop a proper strategy in addressing the PR issues. Proper quality control measures have to be implemented by the company to decrease the number of defective products (Takacs et al., 2014). The customer care services need to be improved and the company needs proper management team leaders who can shake up the entire foundation for providing quality implementation practices of various resources. The company is clearly in trouble as the stock prices are decreasing and he expenses are increasing. These need to be addressed carefully with a proper management team. The CEO of the company has to be aggressive enough to save the company from the drowning waters (Chan et al., 2016). The Garmin products in the niche markets need to be challenged openly with competitive pricing and the cheap rivals like Xiaomi in the Asian markets ned to be pushed back all while keeping the cost of the products in control. The PR team needs to address the health concerns of the customers properly (Diaz et al., 2015).
After the research analysis, I intend on assessing how such a start up like Fitbit could expand so rapidly in a time span of five years. Its rapid expansion strategies could be studied carefully to deduce suggestions for its rapid decline. The future study will be aimed at analysing how the company failed to produce good products despite investing so much money on the research and development departments. Moreover, such an investment failed to deduce the defects of devices before marketing them. For future study, I need to analyse the research and development team of Fitbit to understand conclusively what went wrong with the device. The marketing campaigns and the diversification strategies need to be studied as well as such an organization fails to meet its minimal revenue due to a factor of problems.
References
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